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January 2018

Columbus Team Defeats Preliminary Injunction in Trade Secret Dispute

Gordon Rees Scully Mansukhani Columbus attorneys Gregory Brunton and Tyler Tarney defeated a request for a preliminary injunction in a trade secret dispute filed by an advanced braiding manufacturer in the United States District Court for the Southern District of Ohio.

The plaintiff alleged that Gordon & Rees’s clients—an engineer previously employed by the plaintiff and an alleged “direct competitor” that hired him—misappropriated trade secrets and confidential information. The plaintiff moved for a preliminary injunction requesting, among other relief, an order preventing the engineer from working in his current role for the new company and the new company from soliciting the plaintiff’s customers. The plaintiff acknowledged that it lacked evidence that its trade secrets were disclosed or being used. Instead, it relied on the alleged risk of threatened misappropriation under the “inevitable disclosure” doctrine. The plaintiff argued that the relief was justified given the former engineer’s comprehensive knowledge of its trade secrets and that he was employed by a competitor in a substantially similar position.

In response, the Gordon & Rees attorneys emphasized that: (1) the former engineer’s two-year non-compete expired before he was hired; (2) there was no evidence that any alleged trade secrets or confidential information were taken, disclosed, or used; and (3) there could be no substantial threat of misappropriation under the inevitable disclosure doctrine absent evidence of “nefarious activities or attempts to circumvent any of the parties’ agreements,” improper solicitation, or other “evidence to cast doubt” on assurances made. They further cautioned that granting drastic injunctive relief against former employees who wait out their non-competes based on speculation alone would set a dangerous precedent circumventing the limitations on non-competes and setting a dangerous precedent for anti-competitive litigation. In addition, they filed a motion arguing that the trade secrets at issue were not sufficiently identified and seeking to require the plaintiff to specifically identify them before discovery.

On December 27, 2017, the Court denied the plaintiff’s motion for preliminary injunction. In finding that the plaintiff failed to show a likelihood of success on the merits, the Court highlighted the significant time elapsed, the lack of evidence that the plaintiff’s trade secrets and confidential were disclosed or used, and the lack of circumstantial evidence of misappropriation, intent to misappropriate, or other nefarious activities. The Court also noted that granting an injunction under these circumstances would have “chilling and widespread implications” where any employee with specialized knowledge could be “forbidden from working for a direct competitor indefinitely.” Finally, the Court ruled that the plaintiff must specifically identify the alleged trade secrets at issue before Gordon & Rees’s client would be required to divulge its own trade secrets during discovery.

Gregory D. Brunton
Tyler Tarney